Historical Sketch
With the conquest of Rome in 1870 by Italian troops the Pope lost his territories and was reduced to the role of Bishop of Rome and head of the Catholic Church. In 1929, the Fascist Italian government concluded the Lateran Treaties with the Holy See creating the (symbolic) State of the Vatican City with territorial authority over the area of St. Peter cathedral and a few palaces within the city of Rome and with the Pope as nominal head of state.
Monetary History Overview
A year after the Lateran Treaties, Italy and the Vatican concluded a monetary convention under which Vatican coins could be issued in Italian currency and would be recognized as legal tender in Italy. The mutual recognition of the coinage was extended to San Marino. Coin issuance began in 1931 and expanded throughout the years as the Vatican coins sold well to collectors and tourists. In 1999, Italy introduced the European Euro, and after 2002, the Lira ceased to circulate. The Vatican is not a member of the European Monetary Union and cannot issue Euro coins in its own right. For this reason, Italy and the EU agreed in 2001 that Italy may cede a percentage of its annual mintage quota to the Vatican. Since 2010, the agreement is between the EU and the Vatican directly. The Vatican coins are legal tender in the entire Euro area, but still are mainly sold to collectors and tourists.
Currency Institutes Timeline